"The downgrades, flagged a month ago by Fitch, come as Greece negotiates with creditors on how to avoid a default and other euro nations struggle to bolster the region's defenses against contagion should those talks fail. While sovereign-bond yields have fallen in Italy, Spain and elsewhere in recent weeks as the European Central Bankadded liquidity, the 17-nation region still lacks the protection it needs for such a situation.

"U.S. Treasury Secretary Timothy Geithner warned European leaders in Davos, Switzerland, on Jan. 27 that the U.S. isn't willing to provide more support unless they act first."